Nor does it aim to take wealth from one group and give it to another. No economy can grow by excluding any part of its people, and an economy that is not growing cannot integrate all of its citizens in a meaningful way. As such, this strategy stresses a BEE process that is associated with growth, development and enterprise development, and not merely the redistribution of existing wealth.
Both refer to the same strategic framework that seeks to right the wrongs of the past and to distribute the wealth of nation across all races and genders. The codes require that all entities operating in the South African economy make a contribution towards the objectives of BEE. The first phase of the codes encourages all entities, public and private, to implement proper BEE initiatives through the issuing of licences, concessions, sale of assets and preferential procurement. The second phase of the codes covers the seven components of the B-BBEE scorecard, namely: ownership; management control; employment equity; skills development; preferential procurement; enterprise development; and socioeconomic development including industry-specific and corporate social investment initiatives.
The B-BBEE Act of makes the codes binding on all state bodies and public companies, and the government is required to apply them when making economic decisions on:.
Click here for more details on each step. Private companies must apply the codes if they want to do business with any government enterprise or organ of state — that is, to tender for business, apply for licences and concessions, enter into public-private partnerships, or buy state-owned assets. Companies are also encouraged to apply the codes in their interactions with one another, since preferential procurement will affect most private companies throughout the supply chain.
Read more: Black economic empowerment [SouthAfrica. Subscribe and stay in touch with the latest SME news, game changing tips and motivational stories. By clicking Subscribe you agree to the conditions of our Privacy Policy. This article forms part of our Youth Month series, WeMove, providing youth-focused tools and resources to help you to […]. Are businesses targeting a few top talented individuals, or the lower level staff? Though the former may be a more attractive option, due to the potential business opportunities that may arise, too many of these types of structures will do little to benefit the masses.
Given a brief consideration of some of these factors, perhaps the question is not whether BEE is the right thing to do or not, but rather how BEE can be implemented for a specific business at a specific point in time, by targeting the right audience.
It seems few would argue that the political injustices of the past need to be adequately addressed. BEE has certainly had some success in attempting to amend this.
This seems to demonstrate that, with the right factors in place, BEE has a key role to play in addressing these injustices. Of course there may also be other initiatives that could contribute, which can be applied in conjunction with BEE. He has been working in the financial services industry for numerous years, starting off at Investe Please enable JavaScript. Viewing offline content Limited functionality available. My Deloitte. Undo My Deloitte. Save for later. Disparate Views There are views on either side of the spectrum as to whether there is value in the BEE legislation.
Missing the Point Though these arguments may have their merits, it seems there are two fundamental points that are being overlooked. The article first appeared in ASA. Key Contact. Searle Silverman Associate Director sesilverman deloitte. Contact us Submit RFP. Thought leadership Publications Broad-based black economic empowerment — basic principles.
What governs BEE? Why does a company need a BEE rating? How is a BEE rating determined? These empowerment requirements are specific to the underlying legislation and relate to the licence to operate. For example, in terms of the Mineral and Petroleum Resources Development Act, an entity must have 26 per cent Black ownership in order to be issued with a mining right. Transacting with organs of state Organs of state are generally required to issue a request for proposal RFP for any work that they intend to source from the private sector.
Transacting with private entities With regards to interactions with private entities, a company will score better for BEE itself if it procures goods and services from other entities with high BEE ratings. Large enterprises 1 The priority elements for large enterprises are: Ownership.
Entities must achieve a minimum of 40 per cent of the annual net value targets in the ownership element. In essence, the net value element measures the funding attaching shares held by Black shareholders. The equity value to debt value ratios and repayment of the funding must occur in line with certain ratios and formulae in the BEE Codes in order for an entity to score well for this portion of the ownership element; Skills development.
Entities must achieve a minimum of 40 per cent of the target set out in the skills development element; and Enterprise and supplier development. Entities must achieve a minimum of 40 per cent of the target set out in the three of the sub-elements of the enterprise and supplier development. Qualifying small enterprises 2 The priority elements for qualifying small enterprises are: ownership; and one of skills development; or enterprise and supplier development.
Amber Kardamilakis.
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